Breakdown recovery

In February the mood on the WSE was mixed: for a few days bearish, and for the next few days bullish

As a result, three weeks into the month, the indices were at similar level as on February 1st. In fact, that was the best day of the month for investors – the main indexes broke new psychological barriers – 55,000 in case of the WIG, and 3,500 for the WIG 20. But that was all – in the days that followed, stocks were traded in a nervous atmosphere before the WSE went into a decline, mostly due to the negative sentiment on Western markets. On the 13th day of the month, crucial equipment on the WSE stopped working, and the exchange suffered the biggest breakdown in its history. Trading was halted for half of the day. But after that, the indices started to climb and recovered their losses. Investors were encouraged by, among other factors, January’s industrial production data, which was far better than expected and confirmed that the economy is still growing.  Analysts, in their predictions for the next few weeks, claim that stocks may be overvalued, but on the other hand, whenever prices drop just a little, it is a good chance for buyers to return to the higher levels.

 Looking at the construction sector, the most significant news concerned the Orco Property Group of Luxembourg (listed on Euronext and in Prague), which announced plans to enter the WSE. The initial public offering of the Orco Property Group, worth EUR 100 mln, is scheduled for the first half of 2007. According to Orco representatives, the company has extensive development plans, not only in Warsaw but in other towns and cities in Poland too. It is also considering some acquisitions of companies with the potential for further development. As for companies already listed on the WSE, it is worth mentioning that Polnord decided to sell its construction operations as a part of its strategy to focus on development projects. The company intends to sell its general contractor operations to Pol-Aqua. Another firm – Projprzem – wants to focus on development activity too, and in order to do that, it wants to buy some medium-sized companies providing construction services. Meanwhile, Polimex in a consortium with Spanish Dragados won a contract for a link of the A4 highway. It seems that Budimex Dromex has a new competitor in the road-building industry.       

            (mir)